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Charitable Contributions for September 11: Protecting against Fraud, Waste, and Abuse.
Subcommittee on Oversight and Investigations
Mr. Bob Bender
Introduction Within moments of the first
plane tearing into the World Trade Center on that terrible morning of September
11th, 2001, the tragic events that transformed this nation also began
the largest disaster response in the history of the American Red Cross -
our nation's oldest, most experienced and most trusted humanitarian
organization. A terrorist event is
unlike any other disaster and requires the American Red Cross to be prepared to
serve the American people in accordance with our Congressional Charter.
The American Red Cross, along
with each of us here today, could not possibly have anticipated the scope of
such an event nor have been fully prepared for the impact this would have on the
lives and families of those affected. As we always do, the Red Cross immediately
began providing emergency relief and emotional support to a nation stunned by
the brutality of an unprecedented attack on American soil.
We, like all other first responders, were overwhelmed in those first
chaotic and uncertain hours following the attack. By 10 a.m. there were hundreds and thousands missing at
ground zero in New York, at the Pentagon and at the Pennsylvania crash site.
All of American was on edge. Rumors
flew. No one knew what would happen next. At the World
Trade Center, there was Red Cross staff unaccounted for, we were without phones,
and our emergency response vehicles couldn't get to the site. Chartered by
Congress in 1905 to maintain a system of national and international relief, it
is the mission of the American Red Cross to help people prevent, prepare for and
respond to emergencies. The Red Cross is an essential partner with federal
response agencies during disasters through its lead role for mass care under the
Federal Response Plan. Our primary
focus is on the human needs of those affected, and we
respond to both the physical and emotional devastation experienced
by people during and after a disaster. Our duty yesterday, today and tomorrow is
to serve humanity with dignity, valor, and compassion. Immediate
Response to the Events of September 11th, 2001 The New York Times on October
21st described part of the scene immediately following the attack on
the World Trade Center: ".The
survivors, blanketed in the gray mist of urban disaster, headed north and east.
The attack's human spores bearing their stories, their fear, throughout
the city." In the initial hours
and days, we took the steps necessary to establish order out of chaos and
support those whose world had just been torn apart -
those in New York walking out of the gray dust to nowhere, those at the Pentagon
fleeing from the intense heat and flames, and those families urgently wanting to
hear about loved ones whose planes never arrrived.
First at the scene in some 67,000 disasters each year, the Red Cross goes
to where the people are -be
it at bus stops, subway stations, the East-West highway in New York City, the
Pentagon parking lots or a pasture in Pennsylvania. Thousands of times over, in
New York, Washington and Pennsylvania, we met the needs of those affected with a
compassionate presence. This presence was possible because the Red Cross has
build a nationwide network of chapters that we can draw from, we are staffed
with dedicated employees, and rely on a vast "Army of Mercy" in the words of
FDR-our millions of volunteers. We do not wait for people to
come to us, but reach out to find those in need.
Our immediate disaster response efforts have served 25,000 families by
providing direct assistance for food, shelter, and clothing.
For example, in apartment buildings surrounding the World Trade Center,
we found elderly people afraid to venture beyond their rooms.
Many were absent their health care assistants.
Red Cross workers filled prescriptions and made sure that their daily
needs were met. Since the attack,
we have provided more than 9 million meals -100,000
meals a day -
to families and rescue workers. We
found firemen, police, emergency medical crews and responders of all sorts who
needed water, shelter, a change of clothes, a place to rest, or a place that
could provide silence and solace. Our Air Incident Response
Teams, always on immediate alert, were dispatched to each departure site and
every scheduled arrival site for the four flights hijacked that day.
We also provided teams to the United Airlines' Headquarters in San
Francisco and American Airlines' Headquarters in Dallas. Mental health, grief
counseling and spiritual support and other referrals were extended in each
location. Dozens of Red Cross
chapters nationwide mobilized to help travelers stranded at airports across the
country. It truly has been a
tragedy that has reached across America. In a time of tremendous
uncertainty, we ensured that blood would be available wherever needed.
We mobilized our national blood system to preposition stocks around the
New York metropolitan area, to meet a need, which unfortunately never came.
But we had to be ready. And
we were. Outpouring
of Support by the American People As always in the face of
tragedy, the American spirit is indestructible.
Just as this heinous act was unprecedented in its destruction, the
response from the people of America is inspiring -
people waiting hours in long lines to donate blood, flooding phone lines to
volunteer their time in any way that was needed, and personally delivering
financial contributions. There was a need for people to connect with other
people and to do something, anything, to help.
We have been deeply honored by the examples of selflessness: American
Airlines flight crews giving blood in honor of their colleagues who perished,
school children taking collections and organizing car washes, coins collected in
bags, and volunteers coming to our door by the thousands. Even Congress set new records for blood donations two days
after the attacks. The generous financial and
in-kind assistance that the American Red Cross has received from individuals,
companies, foundations is unprecedented.
This is being handled with utmost openness, accountability and
integrity. Therefore,
we established the Liberty Disaster Relief Fund, a separate, segregated account
that was created to hold and disburse funds related to the September 11th
attacks, its aftermath, and other terrorist events.
This fund is structured to ensure that every dollar raised will go to
help people who are and will be affected by acts of terrorism as well as to
ensure the Red Cross will help people whenever and wherever terrorism strikes.
We believe the establishment of this account is the best way to assure
absolute transparency, clear accountability and demonstrate our commitment to
donor intent. The tremendous outpouring of
support by the American people has enabled the Red Cross to fulfill its mission
following these attacks. In just 7 short weeks, the Red Cross has received
pledges and contributions totaling $564 million. To date $154 million has been
spent or committed, $120 million for direct assistance to 25,000 families in the
form of cash and vouchered assistance to cover their emergency needs including
food, clothing and temporary shelter. While we have a balance of funds
uncommitted at this date, we will hold aside these contributions to be made
available for emerging needs. We
have adapted quickly to the level of support and generosity demonstrated by the
American people. To have
responsibly disbursed $120 million to 25,000 families in less than 7 weeks is
extraordinary and is unprecedented in the nonprofit world.
Included in these figures is
assistance provided under a new initiative for families who lost loved ones on
September 11th. For families who
lost breadwinners, a family gift program has been established to cover 3 months
of financial needs - rent, mortgages, childcare, and food.
To date, Red Cross has spent or committed $47.9 million to more than
2,300 families who have been helped through the receipt of emergency gift
checks. We will continue to work with these families beyond the initial period
to evaluate how else we might support them in the months ahead. All of America is grieving. The wife of a Red Cross employee in Washington, D.C. is
constantly haunted by visions of her husband being killed in an attack on the
nation's capital. The father of a
nine-year-old in Memphis, Tennessee wonders how he can stop the nightmares of
his child who dreams about planes crashing into buildings.
For these people and others, we have had close to 135,000 mental health
and grief counseling contacts. All of our financial assistance
is being provided in the most expeditious way possible.
A simple one-page gift form is the only paperwork required, which is
processed promptly with checks issued overnight.
The forms can be done by fax, phone or electronically, and are available
through the Family Assistance Center and at other family assistance sites in New
York City, or any one of our 1,000 chapters located in communities nationwide. We do not wait for families to
contact us for this assistance. We
have implemented an aggressive outreach program.
Early in October, we placed advertisements in major newspapers appealing
to families to come forward and receive assistance.
We've also contacted employers of the World Trade Center, floor by
floor, to reach out to their employees, searched hospital lists and the list of
confirmed deceased. Forty Red Cross
employees and volunteers are dedicating their days to calling and contacting
families who might qualify for cash or other assistance.
All told, we've contacted about 3,300 families, and the number grows
daily. Because this tragic event also
injured and killed foreign nationals, the Red Cross has extended its reach to
families across the globe through our International Family Assistance program.
To date, we have opened more than 169 cases involving the families of
foreign nationals. The Red Cross
international aid package includes: financial assistance for travel to and from
the United States, lodging, meals, local transportation, crisis counseling,
advocacy and referral with U. S. agencies, repatriation of remains, funeral
expenses, tracing services, and information about embassies and consulates.
We are being assisted by our partner Red Cross and Red Crescent societies
the world over. Financial
Stewardship and Charitable Fraud
The American people have rushed
to support our efforts with an unprecedented surge of generosity.
In response, the Red Cross has put in place stringent accounting measures
at both the National Headquarters and throughout our chapters to ensure
stewardship of these funds. Our internal audit staff and KPMG, our external
auditors, began reviewing and testing control processes and procedures for
donations and disbursements the week following the terrorist attack.
That testing continues. National
Headquarters has instructed the corporate external auditor, KPMG, to begin
fiscal year 2002 audit testing of contributions immediately, and have directed
chapters to require the same of their auditors and independent CPAs. Federal statutes prohibit the
use of the American Red Cross name and emblem by commercial concerns and
unauthorized solicitations (Title 18 USC §706) and provide for fines and
imprisonment (Title 18 USC § 917). In
order to ensure that all donations are collected on behalf of the Red Cross is
received and properly acknowledged for tax purposes, we have established formal
agreements with groups and businesses that have helped to raise funds.
A third-party group can conduct a fundraiser provided their local Red
Cross chapter approves it and a signed letter of agreement has been received. This committee has provided
leadership in the area of protecting charitable organizations from fraudulent
use of the Internet and other media in soliciting funds.
We applaud your efforts to prevent such activity.
As one of the country's largest non-profit organizations, we have
effective firewalls and tight security protocols in place to detect and trace
these activities. On September 14, the Red Cross sent an e-mail message to
30,000 previous online donors. This message included a URL link to an official,
secure online donation site. The American Red Cross and its online partners (aol.com,
yahoo.com, paypal.com, libertyunites.com, and wellsfargo.com) accept credit card
information only through a secure portal on a Web site, not through an e-mail
message. When Internet scams have
been detected, we have worked closely with the Federal Trade Commission and the
Department of Justice, and taken aggressive steps taken to shut them down. Symantec, an information
technology security firm, retained by Red Cross notified us on October 17, 2001,
about the Septer.Trojan computer virus for potential credit card donors. The
virus came in the form of an executable file attached to an e-mail message that
appears to come from the American Red Cross, United Way and the September 11th
Fund. The American Red Cross Office of General Counsel contacted law enforcement
authorities immediately about this fraudulent act. Coordination
of Relief Efforts
We typically lead and champion
cooperation with other relief agencies to insure we don't duplicate efforts
and to protect against any gaps in services.
The Red Cross leadership and the Attorney General of New York, Eliot
Spitzer, have been engaged in a constructive dialogue on a means of improving
access to the vast disaster relief resources now marshaled to help the victims
of the September 11th attacks. We are hopeful that a system will be
established to enable disaster relief recipients to maximize the relief
resources available to them. The Road
Ahead
The
American Red Cross will be with the survivors and families affected by this
tragedy for as long as it takes.
Our decades of experience with disaster victims tell us that assistance
will be needed for years to come. We
need to ensure that the resources entrusted to us by the American people will be
available to meet these future needs. Family Assistance Centers were
established for the loved ones of those lost in the World Trade Center and the
Pentagon. The Center is still
operating at full strength in New York City.
A one-stop relief center, families can avail themselves of the full
breadth of Red Cross services in an environment where confidentiality, dignity
and compassion are the hallmark attributes.
We are committed to this outreach, and will work with those affected for
years after this event. In other ways, our work has
just begun. The site of the World
Trade Center, now called "The Pile", is emblematic of the work ahead and the
human needs we will serve. There,
work that is physically arduous, always dangerous and emotionally draining will
continue for another 9 to12 months. Construction
workers, firemen, police, and emergency medical technicians are not forgotten.
We are operating special respite centers on-site.
It is a place away from the noise and the dirt, where workers can come to
find food, shelter, a change of clothes, a place to sleep, or to read a card
written with special care from a child. This
is a place to refresh the body and the spirit in order to go back, once again,
to their work. This is another
example of a new service for us, a service we adapted to the needs of those
involved in this disaster. We now find ourselves in the
grip of a biological attack. We are
assisting the families of those directly affected from anthrax exposure. We have offered immediate financial assistance through our
Family Gift Program, and we are contacting 16 victims who are or have been
hospitalized for anthrax. Further,
because the current attack has understandably created public anxiety, we are
reaching out to communities with public awareness and education materials.
We will continue to develop these materials to address the community
education requirements regarding biological and chemical agents. Conclusion The American Red Cross today is helping tens of thousands of people affected by acts of terrorism in the United States. We were among the first on the scene and we will be helping people for as long as it takes. The clear focus of our Liberty Disaster Relief Fund is to ensure that every dollar raised will go to help people who are and will be affected by acts of terrorism as well as to ensure the Red Cross will help people whenever and wherever terrorism strikes. We thank you Chairman Greenwood and Representative Deutsch for holding this timely and important hearing.
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